Special provision is needed for leases moving toward expiry, because no other interest in land suffers an inevitable fall in value without some change to the property itself (such as the working of a quarry). The relief available is reduced by IHTA 1984, s. 194 in respect of ‘losses’ due to a lease nearing its expiry.

The Inheritance Tax Act 1984, s. 194 applies to leases which had 50 years or less to run at the date of death. The sale price is increased by an amount equal to the ‘appropriate fraction’ of the value on death. The ‘appropriate fraction’ is defined by s. 194(2) as:

P(1) − P(2)


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